Gold’s Second Repricing: Why the $5,000 Scenario Is Becoming Structural

Gold’s surge in 2025 has challenged the traditional assumption that sharp price gains must be followed by deep corrections. Prices posted their strongest annual jump since the 1979 oil crisis and doubled over the past two years, reaching a record near $4,380 per troy ounce in October after never having traded above $3,000 before March. In previous cycles, such a move would almost automatically have triggered expectations of a collapse. Instead, analysts at JP Morgan, Bank of America, and Metals Focus increasingly argue that gold is entering a structurally higher price regime, with levels around $5,000 per ounce in 2026 now seen as plausible rather than extreme.

A key difference in this cycle is the stabilising role of central banks. For a fifth consecutive year, official institutions are expected to continue diversifying reserves away from dollar-denominated assets. This demand has a countercyclical quality: when investor positioning becomes stretched and prices pull back, central banks tend to buy, effectively resetting the market at a higher equilibrium. Estimates suggest that roughly 350 tonnes per quarter of combined central bank and investment demand are needed merely to keep prices flat, while forecasts for 2026 point to average buying closer to 585 tonnes per quarter, implying continued upward pressure.

Investor participation has also broadened in ways not seen before. Gold’s share of global assets under management has risen to about 2.8%, up from roughly 1.5% before 2022, yet remains well below historical extremes. The investor base itself has diversified, extending beyond traditional asset managers to include corporate treasurers and new institutional players such as stablecoin issuers holding physical gold as part of reserve strategies. This expansion has helped absorb profit-taking and reduced the risk of abrupt, disorderly sell-offs.

India fits into this broader picture as a market where high prices are reshaping, rather than destroying, demand. Jewellery consumption has weakened sharply as affordability deteriorated, but this has been largely offset by a surge in retail investment. Bar, coin, and exchange-traded gold purchases have risen strongly, supported by gold’s significant outperformance versus domestic equities and the discontinuation of some state-backed gold savings instruments. As a result, retail investment is expected to account for a record share of India’s total gold demand in 2026, reinforcing gold’s role as a financial asset rather than purely a cultural one.

Turkey illustrates a different but complementary dynamic. Years of high inflation, currency depreciation, and political uncertainty have pushed households toward gold as a quasi-monetary store of value. Even after import restrictions, tighter monetary policy, and higher interest rates reduced volumes in 2024–25, gold remains deeply embedded in household balance sheets. Jewellery demand has softened, but largely due to eroding purchasing power rather than fading confidence, meaning value demand continues to support the market.

Together with persistent U.S. fiscal deficits, concerns about Federal Reserve independence, tariff disputes, and geopolitical risks linked to the crisis in Ukraine, these emerging-market dynamics help explain why gold and equities have been rising simultaneously—a phenomenon rarely seen over the past half-century. Gold is increasingly being used not as a cyclical hedge, but as portfolio insurance within equity-heavy allocations.

Price forecasts for 2026 reflect this shift. Morgan Stanley expects gold near $4,500 per ounce by mid-2026, JP Morgan projects prices above $4,600 in the second quarter and potentially over $5,000 by year-end, and Metals Focus also sees $5,000 by the end of 2026. More cautious voices, such as Macquarie, argue that a modest revival in global growth and relatively high real rates could cap prices closer to the low-$4,000s, but even these scenarios imply a level far above pre-2022 norms.

Overall, gold’s current strength appears less like speculative excess and more like a repricing driven by structural forces: central bank behavior, broader investor participation, fiscal and geopolitical uncertainty, and resilient demand from key emerging markets. Within this framework, the $5,000 threshold increasingly looks not like a bubble signal, but like a logical extension of trends already reshaping the global gold market.